Oracle to Offer Faster Databases to Get Growth on Track

By Aaron Ricadela -
Sep 20, 2013

Oracle Corp. (ORCL) Chief Executive
Officer Larry Ellison, whose sailing team is trailing Emirates
Team New Zealand in the America’s Cup yacht race, is also facing
headwinds in cloud-computing and business applications.

To combat that, the world’s biggest database-software
provider is unveiling new products targeting customers of SAP AG (SAP)
and International Business Machines Corp. (IBM) at the company’s
OpenWorld customer conference in San Francisco next week. They
include a high-end computer system that can tackle more data-processing jobs using fast memory chips.

Revenue growth at Oracle is slowing amid competition in the
business-applications market from Salesforce.com Inc. (CRM), Workday
Inc. (WDAY) and other providers of online software. While Ellison has
been making acquisitions and investing in cloud tools that run
over the Web, Oracle remains dependent on sales of programs
installed on customers’ servers.

“License growth has stalled,” said Brent Thill, an
analyst at UBS AG in San Francisco, who recommends buying the
shares. “They’re underperforming the software market.”

To spur sales, Ellison is unveiling a package of hardware
and software at a keynote on Sept. 22 that can speed up Oracle’s
database software, co-president Mark Hurd said in an interview
at Oracle’s Redwood City, California, headquarters this week.
The machine features the Sparc chip gained in Oracle’s
acquisition of Sun Microsystems.

Complete Package

Oracle needs new hardware to fuel growth, said Pat Walravens, an analyst at JMP Securities LLC in San Francisco who
rates the company’s shares at market perform, the equivalent of
a hold rating.

At the same time, Oracle sells a set of applications called
Fusion that businesses can use to manage sales, supply chain,
human resources and financial information. The company also
acquired cloud companies in similar areas, including Taleo and
RightNow Technologies.

Hurd said Oracle is the only business-software company that
can offer a suite of Web-delivered tools for a wide range of
applications. The marketing could be better, he said.

“This cloud suite is going to be a big deal,” he said.
“You could argue we could have better awareness, and do more
marketing, but you can’t argue the strategy.”

Part of that involves a new Oracle database called 12c,
which was introduced earlier this year and targets businesses
delivering cloud-computing services. The upgraded machine’s in-memory option will let companies run applications using faster
memory instead of disk drives. SAP already offers an in-memory
database called Hana.

Entrenched Business

Oracle will also unveil a new high-end Sun Microsystems
server with an upgraded M6 chip. John Fowler, Oracle’s executive
vice-president for systems who joined as part of the Sun
acquisition four years ago, said in a recent interview that
Sun’s product line needed lots of updating, a multiyear process.

“It was old when we came into Oracle,” Fowler said. “It
moved from being old to being antique.”

Oracle’s combination of database software, business
applications and hardware has attracted investors like Stephen Yacktman, co-chief investment officer at Yacktman Asset
Management Co. in Austin, Texas. The firm, which owns more than
20 million Oracle shares, according to a June 30 filing, made
the investment at the end of the second quarter.

“They just have a great entrenched position with their
database,” Yacktman said in an interview. “They don’t need to
be in the latest trend in a year. They just need to get around
to it.”

Ellison’s pay package declined 18 percent to $78.4 million
for fiscal 2013 after he gave up an annual bonus and the company
missed some of its profit targets, according to a filing with
the U.S. Securities and Exchange Commission today.

Worth $41.8 billion and ranking eighth on the Bloomberg
Billionaires Index, Ellison, 69, was the highest-paid CEO in the
U.S. this year, according to data compiled by Bloomberg.